Intelidata Technologies Corp.'s fortunes took another dive last week as it reported a loss for the second consecutive quarter.
The future could brighten for the Herndon, Va., company-it sells home banking software, screen phones, and telecommunications products-if the interactive banking market takes off, said analysts.
But even if that were to happen, Intelidata would have to overcome a severe loss of investor confidence.
After a report last week of a $79 million third-quarter loss, or $2.51 a share, Intelidata's share price was $1.96875 at midafternoon Friday, down 65.625 cents for the week and 73% below its price last November.
Intelidata's problems lie mainly in a telecommunications business it entered last year with the acquisition of Colonial Data Technologies Corp., a maker of telephone peripherals such as Caller ID readouts.
Intelidata had hoped for synergies that would boost its sales of screen phones. Instead, Colonial dragged earnings down. Screen phones have not caught on as hoped with banks, and Intelidata has been forced to unload Caller ID devices below cost.
"The bottom has really fallen out on the pricing" of those items, said company spokesman Robert Borella.
The latest earnings report included several special charges, including $11.3 million for the Caller ID inventory. Intelidata also wrote down $43 million to cover goodwill related to last year's merger.
In addition, Intelidata created a $3.7 million reserve account as a hedge against money it is trying to recover from a former partner, Blau Marketing Technologies of Wilton, Conn.
Intelidata pulled out of a joint marketing venture it formed with Blau, bringing those functions in-house. Intelidata is suing to recover about $12 million it invested in the venture. "We dissolved the joint partnership and went to take our half of the money out," Mr. Borella said.
Kevin Timmons, analyst at First Albany Corp. in New York, said Intelidata "is trying to take action and completely change how it is approaching" the telecommunications business. "The questions are whether that change in strategy is going to work and how long it will take."
Intelidata has supported its stock price with buybacks of 700,000 shares since the announcement of a $2.8 million, 9-cents-a-share loss for the second quarter. But its plan to buy two million shares in total has been stalled by a cash shortage.
Though the picture is bleak, analysts said Intelidata may be able to dig itself out. Its home banking products are well respected, and prospects for this side of the business look good.
Intelidata's electronic commerce products and its Interpose on-line software, based on the Open Financial Exchange protocol, have been sold to 20 of the top 100 banks.
Interpose "is a promising morsel of the company, no doubt about it," said Bill Burnham, analyst at Piper Jaffray Inc., Minneapolis. "The problem is that it's just not a very big piece of the company."